Exhibit 10.2 


 


PLACEMENT AGENCY AGREEMENT


 


		December 17,
    2015




 


Craig-Hallum
Capital Group LLC


222
South Ninth Street, Suite 350


Minneapolis,
Minnesota 55402


Attn:
Rick Hartfiel, Director of Investment Banking


 


Ladies
and Gentlemen:


 


Introduction.
Subject to the terms and conditions herein (this “Agreement”), eMagin Corporation, a Delaware corporation (the
“Company”), hereby agrees to sell up to an aggregate of $6,000,000 of securities of the Company, including,
but not limited to, 4,000,000 shares (the “Shares”) of the Company’s common stock, $0.001 par value per
share (the "Common Stock”), and common stock purchase warrants (the “Warrants”) to purchase
up to an aggregate of 2,600,000 shares of Common Stock (the “Warrant Shares” and, together with the Shares,
the “Registrable Securities”) directly to various investors (each, an “Investor” and, collectively,
the “Investors”) through Craig-Hallum Capital Group LLC, as placement agent (the “Placement Agent”).
The purchase price to the Investors for each Share (including the Warrants) is $1.50 and the exercise price to the Investors for
each share of common stock issuable upon exercise of the Warrants is $2.05. The Placement Agent may retain other brokers or dealers
to act as sub-agents or selected-dealers on its behalf in connection with the Offering (as defined below). The Shares, the Warrants
and the Warrant Shares are at times referred to herein as the “Securities.”


 


The
Company hereby confirms its agreement with the Placement Agent as follows:


 


Section
1.              Agreement to Act as Placement Agent.



 


(a)       On
the basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and
conditions of this Agreement, the Placement Agent shall be the exclusive Placement Agent in connection with the offering and sale
by the Company of the Securities pursuant to the Company's effective registration statement on Form S-3 (File No. 333-196720)
(the “Registration Statement”) and the Warrants and Warrant Shares pursuant to an exemption from the registration
requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof, with the terms of such offering (the “Offering”)
to be subject to market conditions and negotiations between the Company, the Placement Agent and the prospective Investors. The
Placement Agent will act on a reasonable best efforts basis and the Company agrees and acknowledges that there is no guarantee
of the successful placement of the Securities, or any portion thereof, in the prospective Offering. Under no circumstances will
the Placement Agent or any of its “Affiliates” (as defined below) be obligated to underwrite or purchase any of the
Securities for its own account or otherwise provide any financing. The Placement Agent shall act solely as the Company’s
agent and not as principal. The Placement Agent shall have no authority to bind the Company with respect to any prospective offer
to purchase Securities and the Company shall have the sole right to accept offers to purchase Securities and may reject any such
offer, in whole or in part. Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of, the
Securities shall be made at one or more closings (each a “Closing” and the date on which each Closing occurs,
a “Closing Date”). As compensation for services rendered, on each Closing Date, the Company shall pay to the
Placement Agent the fees and expenses set forth below:


 


(i)       A
cash fee equal to 6.25% of the gross proceeds received by the Company from the sale of the Securities at the closing of the Offering
(the “Closing”).


 






     


     


    

 


(ii)       The
Company also agrees to reimburse Placement Agent’s actual expenses (with supporting invoices/receipts) up to a maximum of
$100,000. If the Offering is not completed, the total of such reimbursable expenses shall be capped at $50,000 and only as permitted
to be reimbursed by FINRA Rule 5110(f)(2)(D). Excluding legal disbursements, any individual expense over $5,000 shall require
the Company’s prior written preapproval.


 


(b)       The
term of the Placement Agent's exclusive engagement will be until December 31, 2015 (the “Exclusive Term”).
Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution
contained herein and the Company’s obligations contained in the indemnification provisions will survive any expiration or
termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses
actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted to be reimbursed under FINRA Rule 5110(f)(2)(D),
will survive any expiration or termination of this Agreement. Nothing in this Agreement shall be construed to limit the ability
of the Placement Agent or its Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial
advisory or any other business relationship with Persons (as defined below) other than the Company. As used herein (i) “Persons”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind and (ii) “Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended (the
“Securities Act”).


 


Section 2.            Representations, Warranties and Covenants of the Company. The Company hereby represents, warrants and covenants to the
Placement Agent as of the date hereof, and as of each Closing Date, as follows:


 


(a)       Securities
Law Filings. The Company has filed with the Securities and Exchange Commission (the “Commission”) the Registration
Statement under the Securities Act of 1933, as amended (the “Securities Act”), which was filed on June 13,
2014 for the registration under the Securities Act of the Securities and became effective on June 25, 2014. Following the determination
of pricing among the Company and the prospective Investors introduced to the Company by Placement Agent, the Company will file
with the Commission pursuant to Rule 424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”)
of the Commission promulgated thereunder, a final prospectus and prospectus supplement relating to the placement of the Securities,
their respective pricings and the plan of distribution thereof and will advise the Placement Agent of all further information
(financial and other) with respect to the Company required to be set forth therein. Such registration statement, at any given
time, including the exhibits thereto filed at such time, as amended at such time, is hereinafter called the “Registration
Statement”; such prospectus in the form in which it appears in the Registration Statement is hereinafter called the
“Base Prospectus”; and the supplemented form of prospectus, in the form in which it will be filed with the
Commission pursuant to Rule 424(b) (including the Base Prospectus as so amended or supplemented) is hereinafter called the “Prospectus
Supplement.” The Registration Statement at the time it originally becomes effective is hereinafter called the “Original
Registration Statement.” Any reference in this Agreement to the Registration Statement, the Original Registration Statement,
the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents incorporated by reference
therein (the “Incorporated Documents”), if any, which were or are filed under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), at any given time, as the case may be; and any reference in this Agreement
to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement,
the Original Registration Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include
the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or
the Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference. All references in this Agreement
to financial statements and schedules and other information which is “contained,” “included,” “described,”
“referenced,” “set forth” or “stated” in the Registration Statement, the Base Prospectus or
the Prospectus Supplement (and all other references of like import) shall be deemed to mean and include all such financial statements
and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be. The Company has not received any notice that the Commission has issued
or intends to issue a stop order suspending the effectiveness of the Registration Statement or the use of the Base Prospectus
or the Prospectus Supplement or intends to commence a proceeding for any such purpose.


 






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(b)       Assurances.
The Original Registration Statement, as amended, (and any further documents to be filed with the Commission) contains or incorporates
by reference all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable
Rules and Regulations and did not contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading. The Base Prospectus, and the Prospectus Supplement,
each as of its respective date, comply or will comply in all material respects with the Securities Act and the applicable Rules
and Regulations. Each of the Base Prospectus and the Prospectus Supplement, as amended or supplemented, did not and will not contain
as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. The Incorporated Documents, when
they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable
rules and regulations promulgated thereunder, and none of such documents, when they were filed with the Commission, contained
any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect
to Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus Supplement), in light of the circumstances
under which they were made not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events
arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set
forth therein is required to be filed with the Commission. Except for this Agreement, there are no documents required to be filed
with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to
the Securities Act or (y) will not be filed within the requisite time period. Except for this Agreement, there are no contracts
or other documents required to be described in the Base Prospectus or Prospectus Supplement, or to be filed as exhibits or schedules
to the Registration Statement, which have not been described or filed as required.


 


(c)       Offering
Materials. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior
to each Closing Date, any offering material in connection with the offering and sale of the Securities other than the Base Prospectus,
the Prospectus Supplement, the Registration Statement, copies of the documents incorporated by reference therein, the Transaction
Documents with the investors (as defined in the Securities Purchase Agreement), and any other materials permitted by the Securities
Act.


 



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(d)       Subsidiaries.
All of the direct and indirect subsidiaries of the Company (the “Subsidiaries”) are set forth in the Incorporated
Documents. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free
and clear of any liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions
(collectively, “Liens”), and all of the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.


 


(e)       Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of this Agreement or any other agreement entered into between the Company and the Investors, (ii) a material
adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company
and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under this Agreement or the transactions contemplated under the Prospectus Supplement
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened
(“Proceeding”) has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to
revoke, limit or curtail such power and authority or qualification.


 


(f)        Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Prospectus Supplement and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of this Agreement by the Company and the consummation by it of the transactions contemplated
hereby and thereby and under the Prospectus Supplement have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Company’s Board of Directors (the “Board of Directors”)
or the Company’s stockholders in connection therewith other than in connection with the Required Approvals (as defined below).
This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute
the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited
by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.


 






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(g)       No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the transactions contemplated pursuant
to the Prospectus Supplement, the issuance and sale of the Securities and the consummation by it of the transactions contemplated
hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected,
or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.


 


(h)       Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of this Agreement and the transactions contemplated
pursuant to the Prospectus Supplement, other than: (i) the filing with the Commission of the Prospectus Supplement, (ii) application(s)
to the NYSE MKT (the “Trading Market”) for the listing of the Registrable Securities for trading thereon in
the time and manner required thereby and (iii) such filings as are required to be made under applicable state securities laws
(collectively, the “Required Approvals”).


 


(i)        Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the Prospectus Supplement,
will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Warrant
Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and
clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the number of shares
of Common Stock issuable pursuant to the Prospectus Supplement.


 


(j)        Capitalization.
The capitalization of the Company is as set forth in the Incorporated Documents. The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time any Common Stock, including, without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for,
or otherwise entitles the holder thereof to receive, Common Stock (“Common Stock Equivalents”) outstanding
as of the date of the most recently filed periodic report under the Exchange Act. Except as disclosed in Schedule 3.1(j)
(as such term is hereinafter defined), no Person has any right of first refusal, preemptive right, right of participation, or
any similar right to participate in the transactions contemplated by this Agreement and the transactions contemplated pursuant
to the Prospectus Supplement. Except as a result of the purchase and sale of the Securities or as disclosed in Schedule 3.1(j),
there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. Except as disclosed
in Schedule 3.1(j), the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Investors) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements
with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between
or among any of the Company’s stockholders.


 






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(k)       SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with
the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on
a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.


 


(l)        Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there
has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by the Prospectus Supplement or disclosed in the Prospectus Supplement,
no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or
exist with respect to the Company or its Subsidiaries or their respective business, prospects, properties, operations, assets
or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this
representation is made.


 



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(m)       Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement and the transactions
contemplated pursuant to the Prospectus Supplement or the Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not
pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer
of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 


(n)       Labor
Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of
the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 


(o)       Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has
the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.


 






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(p)       Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.


 


(q)       Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment
of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which
the Company and the Subsidiaries are in compliance.


 


(r)        Patents
and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or material for use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the
latest audited financial statements included within the SEC Reports, a notice (written or otherwise) of a claim or otherwise has
any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have
a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


(s)       Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business without a significant increase in cost.


 






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(t)        Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and,
to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each
case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for
expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock
option plan of the Company.


 


(u)       Sarbanes-Oxley;
Internal Accounting Controls. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of each Closing Date. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange
Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s
internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.


 


(v)       Certain
Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be
payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus
Supplement. The Investors shall have no obligation with respect to any fees or with respect to any claims made by or on behalf
of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated
by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement.


 






    	 	9	 



     


    

 


(w)       Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.


 


(x)       Registration
Rights. Except as disclosed in the SEC Reports, no Person has any right to cause the Company to effect the registration under
the Securities Act of any securities of the Company.


 


(y)       Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company
has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements.


 


(z)        Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Investors as a result of the Investors and
the Company fulfilling their obligations or exercising their rights under this Agreement and the transactions contemplated pursuant
to the Prospectus Supplement, including without limitation as a result of the Company’s issuance of the Securities and the
Investors’ ownership of the Securities.


 


(aa)      Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by this Agreement and the transactions
contemplated pursuant to the Prospectus Supplement, the Company confirms that neither it nor any other Person acting on its behalf
has provided any of the Investors or their agents or counsel with any information that it believes constitutes or might constitute
material, non-public information which is not otherwise disclosed in the Prospectus Supplement. The Company understands and confirms
that the Investors will rely on the foregoing representation in effecting transactions in securities of the Company. All of the
disclosure furnished by or on behalf of the Company to the Investors regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made and when made, not misleading.


 






    	 	10	 



     


    

 


(bb)      No
Integrated Offering. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that
would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable
shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.


 


(cc)      Solvency.
Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to
carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof,
and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect
of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from each Closing Date. The SEC Reports sets forth
as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities
for borrowed money or amounts owed in excess of $250,000 (other than trade accounts payable incurred in the ordinary course of
business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or
not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $250,000 due under leases required to be capitalized in accordance with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.


 


(dd)      Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and each Subsidiary (i) has made or filed all United States federal and state income and
all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii)
has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on
such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.


 


(ee)      Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of
the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials
or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.


 






    	 	11	 



     


    

 


(ff)       Accountants.
The Company’s accounting firm is set forth in the Incorporated Documents. To the knowledge and belief of the Company, such
accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the Company’s Annual Report for the year ending December 31,
2015.


 


(gg)      Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s
placement agent in connection with the placement of the Securities.


 


(hh)      Office
of Foreign Assets Control. Neither the Company nor, to the Company's knowledge, any director, officer, agent, employee or
affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”).


 


(ii)       U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Investor’s
request.


 


(jj)       Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System
(the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or
more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 


(kk)      Money
Laundering. The operations of the Company are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.


 


(ll)       Certificates.
Any certificate signed by an officer of the Company and delivered to the Placement Agent or to counsel for the Placement
Agent shall be deemed to be a representation and warranty by the Company to the Placement Agent as to the matters set forth
therein.


 






    	 	12	 



     


    

 


(mm)    Reliance.
The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations
and warranties and hereby consents to such reliance.


 


(nn)      FINRA
Affiliations. Except for Paul Cronson, there are no affiliations with any FINRA member firm among the Company’s officers,
directors or, to the knowledge of the Company, any five percent (5%) or greater stockholder of the Company.


 


Section
3.            Delivery and Payment. Each Closing shall occur at the offices of the Ellenoff Grossman & Schole LLP, 1345 Avenue
of the Americas, New York, New York 10105 (or at such other place as shall be agreed upon by the Placement Agent and the Company)
(“Placement Agent Counsel”). Subject to the terms and conditions hereof, at each Closing payment of the purchase
price for the Securities sold on such Closing Date shall be made by Federal Funds wire transfer, against delivery of such Securities,
and such Securities shall be registered in such name or names and shall be in such denominations, as the Placement Agent may request
at least one business day before the time of purchase (as defined below).


 


Deliveries
of the documents with respect to the purchase of the Securities, if any, shall be made at the offices of Placement Agent Counsel.
All actions taken at a Closing shall be deemed to have occurred simultaneously.


 


Section
4.            Covenants and Agreements of the Company. The Company further covenants and agrees with the Placement Agent as follows:


 


(a)       Registration
Statement Matters. The Company will advise the Placement Agent promptly after it receives notice thereof of the time when
any amendment to the Registration Statement has been filed or becomes effective or any supplement to any Prospectus Supplement
or any amended Prospectus Supplement has been filed and will furnish the Placement Agent with copies thereof. The Company will
file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of any Prospectus Supplement and for so long
as the delivery of a prospectus is required in connection with the Offering. The Company will advise the Placement Agent, promptly
after it receives notice thereof (i) of any request by the Commission to amend the Registration Statement or to amend or supplement
any Prospectus Supplement or for additional information, and (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment thereto or any order directed at any Incorporated
Document, if any, or any amendment or supplement thereto or any order preventing or suspending the use of the Base Prospectus
or any Prospectus Supplement or any amendment or supplement thereto or any post-effective amendment to the Registration Statement,
of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the institution or threatened
institution of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the
Registration Statement or a Prospectus Supplement or for additional information. The Company shall use its best efforts to prevent
the issuance of any such stop order or prevention or suspension of such use.  If the Commission shall enter any such stop
order or order or notice of prevention or suspension at any time, the Company will use its best efforts to obtain the lifting
of such order at the earliest possible moment, or will file a new registration statement and use its best efforts to have such
new registration statement declared effective as soon as practicable.  Additionally, the Company agrees that it shall comply
with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including with respect
to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the Company
under such Rule 424(b) are received in a timely manner by the Commission.


 






    	 	13	 



     


    

 


(b)       Blue
Sky Compliance. The Company will cooperate with the Placement Agent and the Investors in endeavoring to qualify the Securities
(other than the Shares) for sale under the securities laws of such jurisdictions (United States and foreign) as the Placement
Agent and the Investors may reasonably request and will make such applications, file such documents, and furnish such information
as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such
a consent, and provided further that the Company shall not be required to produce any new disclosure document other than a Prospectus
Supplement. The Company will, from time to time, prepare and file such statements, reports and other documents as are or may be
required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request for distribution
of the Warrants. The Company will advise the Placement Agent promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Warrant Shares for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration
or exemption, the Company shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.


 


(c)       Amendments
and Supplements to a Prospectus Supplement and Other Matters. The Company will comply with the Securities Act and the Exchange
Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement, the Incorporated Documents and any Prospectus Supplement. If during the period in which a prospectus
is required by law to be delivered in connection with the distribution of Securities contemplated by the Incorporated Documents
or any Prospectus Supplement (the “Prospectus Delivery Period”), any event shall occur as a result of which,
in the judgment of the Company or in the opinion of the Placement Agent or counsel for the Placement Agent, it becomes necessary
to amend or supplement the Incorporated Documents or any Prospectus Supplement in order to make the statements therein, in the
light of the circumstances under which they were made, as the case may be, not misleading, or if it is necessary at any time to
amend or supplement the Incorporated Documents or any Prospectus Supplement or to file under the Exchange Act any Incorporated
Document to comply with any law, the Company will promptly prepare and file with the Commission, and furnish at its own expense
to the Placement Agent and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration
Statement, the Incorporated Documents or any Prospectus Supplement that is necessary in order to make the statements in the Incorporated
Documents and any Prospectus Supplement as so amended or supplemented, in the light of the circumstances under which they were
made, as the case may be, not misleading, or so that the Registration Statement, the Incorporated Documents or any Prospectus
Supplement, as so amended or supplemented, will comply with law. Before amending the Registration Statement or supplementing the
Incorporated Documents or any Prospectus Supplement in connection with the Offering, the Company will furnish the Placement
Agent with a copy of such proposed amendment or supplement and will not file any such amendment or supplement to which the Placement
Agent reasonably objects.


 


(d)       Copies
of any Amendments and Supplements to a Prospectus Supplement. The Company will furnish the Placement Agent, without charge,
during the period beginning on the date hereof and ending on the later of the last Closing Date of the Offering, as many copies
of the Incorporated Documents and any Prospectus Supplement and any amendments and supplements thereto (including any Incorporated
Documents, if any) as the Placement Agent may reasonably request.


 






    	 	14	 



     


    

 


(e)       Free
Writing Prospectus. The Company covenants that it will not, unless it obtains the prior written consent of the Placement Agent,
make any offer relating to the Securities that would constitute an Company Free Writing Prospectus or that would otherwise constitute
a “free writing prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company
with the Commission or retained by the Company under Rule 433 of the Securities Act. In the event that the Placement Agent expressly
consents in writing to any such free writing prospectus (a “Permitted Free Writing Prospectus”), the Company
covenants that it shall (i) treat each Permitted Free Writing Prospectus as an Company Free Writing Prospectus, and (ii) comply
with the requirements of Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus, including
in respect of timely filing with the Commission, legending and record keeping.


 


(f)       Transfer
Agent. The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.


 


(g)       Earnings
Statement. As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event
not later than 18 months after the last Closing Date, the Company will make generally available to its security holders and to
the Placement Agent an earnings statement, covering a period of at least 12 consecutive months beginning after the last Closing
Date, that satisfies the provisions of Section 11(a) and Rule 158 under the Securities Act.


 


(h)       Periodic
Reporting Obligations. During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the Commission
and the Trading Market all reports and documents required to be filed under the Exchange Act within the time periods and in the
manner required by the Exchange Act.


 


(i)       Additional
Documents. The Company will enter into any subscription, purchase or other customary agreements as the Placement Agent
or the Investors deem necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably
acceptable to the Placement Agent and the Investors. The Company agrees that the Placement Agent may rely upon, and each is a
third party beneficiary of, the representations and warranties, and applicable covenants, set forth in any such purchase, subscription
or other agreement with Investors in the Offering.


 


(j)       No
Manipulation of Price.  The Company will not take, directly or indirectly, any action designed to cause or result
in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.


 


(k)       Market
Standoff. The Company will not offer or sell any securities for a period ending 74 days after the first Closing Date without
the express written consent of the Placement Agent. Such restriction shall not apply to exercises or grants of plan options or
issued and outstanding warrants, nor to conversions of existing convertible securities, nor to securities issued in connection
with the acquisition of a business.


 


(l)       Acknowledgment.
The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit and use of the
Board of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without the Placement
Agent's prior written consent.


 






    	 	15	 



     


    

 


(m)       Announcement
of Offering. The Company acknowledges and agrees that the Placement Agent may, subsequent to the Closing, make public its
involvement with the Offering.


 


(n)       Confidentiality.
The Company acknowledges that this Agreement and all opinions and advice (whether written or oral) given by the Placement Agent
to the Company in connection with the Placement Agent’s engagement are intended solely for the benefit and use of the Company.
The Company further acknowledges that neither the terms of this Agreement nor any of the Placement Agent’s opinions or financial
advice will be disclosed to any third party (other than the Company’s officers, directors, employees and advisors), without
the prior written consent of the Placement Agent, except as required by law, regulation, legal or regulatory process, or any order
or other action of a court or administrative agency of competent jurisdiction. The Placement Agent agrees that any non-public
information relating to the Company or any potential investor received by the Placement Agent from or at the direction of the
Company will be used by the Placement Agent solely for the purpose of performing its roles contemplated hereunder and that the
Placement Agent will maintain the confidentiality thereof. Notwithstanding the foregoing, the Placement Agent may disclose confidential
information hereunder (i) to such of its employees and advisors as Placement Agent determines have a need to know and who are
bound to hold such information confidential, and (ii) to the extent necessary to comply with any order or other action of a court
or administrative agency of competent jurisdiction.


 


(o)       Reliance
on Others. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.


 


(p)       No
Partnership. The Company is a sophisticated business enterprise that has retained the Placement Agent for the limited purposes
set forth in this Agreement. The parties acknowledge and agree that their respective rights and obligations are contractual in
nature. Each party disclaims an intention to impose fiduciary obligations on the other by virtue of the engagement contemplated
by this Agreement.


 


(q)       Research
Matters. By entering into this Agreement, the Placement Agent does not provide
any promise, either explicitly or implicitly, of favorable or continued research coverage of the Company and the Company hereby
acknowledges and agrees that the Placement Agent’s selection as a placement agent for the Offering was in no way conditioned,
explicitly or implicitly, on the Placement Agent providing favorable or any research coverage of the Company. In accordance with
FINRA Rule 2711(e), the parties acknowledge and agree that the Placement Agent has not directly or indirectly offered favorable
research, a specific rating or a specific price target, or threatened to change research, a rating or a price target, to the Company
or inducement for the receipt of business or compensation.


 






    	 	16	 



     


    

 


Section
5.           Conditions of the Obligations of the Placement Agent. The obligations of the Placement Agent hereunder shall be subject
to the accuracy of the representations and warranties on the part of the Company set forth in Section 2 hereof, in each case as
of the date hereof and as of each Closing Date as though then made, to the timely performance by each of the Company of its covenants
and other obligations hereunder on and as of such dates, and to each of the following additional conditions:


 


(a)       Accountants’
Comfort Letter. On the date hereof, the Placement Agent shall have received, and the Company shall have caused to be delivered
to the Placement Agent, a letter from McGladrey LLP (the independent registered public accounting firm of the Company), addressed
to the Placement Agent, dated as of the date hereof, in form and substance satisfactory to the Placement Agent. The letter shall
not disclose any change in the condition (financial or other), earnings, operations, business or prospects of the Company from
that set forth in the Incorporated Documents or the applicable Prospectus Supplement, which, in the Placement Agent's sole judgment,
is material and adverse and that makes it, in the Placement Agent's sole judgment, impracticable or inadvisable to proceed with
the Offering of the Securities as contemplated by such Prospectus Supplement.


 


(b)       Compliance
with Registration Requirements; No Stop Order; No Objection from the FINRA. Each Prospectus Supplement (in accordance with
Rule 424(b)) and “free writing prospectus” (as defined in Rule 405 of the Securities Act), if any, shall have
been duly filed with the Commission, as appropriate; no stop order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission;
no order preventing or suspending the use of any Prospectus Supplement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; no order having the effect of ceasing or suspending the distribution
of the Securities or any other securities of the Company shall have been issued by any securities commission, securities regulatory
authority or stock exchange and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge
of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for
additional information on the part of the Commission shall have been complied with; and the FINRA shall have raised no objection
to the fairness and reasonableness of the placement terms and arrangements.


 


(c)       Corporate
Proceedings. All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement
and each Prospectus Supplement, and the registration, sale and delivery of the Securities, shall have been completed or resolved
in a manner reasonably satisfactory to the Placement Agent's counsel, and such counsel shall have been furnished with such papers
and information as it may reasonably have requested to enable such counsel to pass upon the matters referred to in this Section 5.


 


(d)       No
Material Adverse Change. Subsequent to the execution and delivery of this Agreement and prior to each Closing Date, in the
Placement Agent's sole judgment after consultation with the Company, there shall not have occurred any Material Adverse Change
or Material Adverse Effect.


 


(e)       Opinion
of Counsel for the Company. The Placement Agent shall have received on each Closing Date the favorable opinion of US legal
counsel to the Company, dated as of such Closing Date, including, without limitation, a negative assurance letter, addressed to
the Placement Agent and in form and substance satisfactory to the Placement Agent and the favorable opinions of intellectual property
legal counsel to the Company, including, without limitation, a negative assurance letter, addressed to the Placement Agent and
in form and substance satisfactory to the Placement Agent.


 






    	 	17	 



     


    

 


(f)        Officers’
Certificate. The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect that, and the Placement
Agent shall be satisfied that, the signers of such certificate have reviewed the Registration Statement, the Incorporated Documents,
any Prospectus Supplement, and this Agreement and to the further effect that:


 


(i)       The
representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date,
and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date;


 


(ii)       No
stop order suspending the effectiveness of the Registration Statement or the use of the Base Prospectus or any Prospectus Supplement
has been issued and no proceedings for that purpose have been instituted or are pending or, to the Company’s knowledge,
threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Securities or
any other securities of the Company has been issued by any securities commission, securities regulatory authority or stock exchange
in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory authority or stock exchange in the United States;


 


(iii)       When
the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Incorporated Documents, if any, when such documents became effective or were filed
with the Commission, contained all material information required to be included therein by the Securities Act and the Exchange
Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed
to the requirements of the Securities Act and the Exchange Act and the applicable rules and regulations of the Commission thereunder,
as the case may be, and the Registration Statement and the Incorporated Documents, if any, did not and do not include any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading (provided, however, that the preceding representations
and warranties contained in this paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by the Placement Agent expressly for use therein) and, since the effective
date of the Registration Statement, there has occurred no event required by the Securities Act and the rules and regulations of
the Commission thereunder to be set forth in the Incorporated Documents which has not been so set forth; and


 


(iv)       Subsequent
to the respective dates as of which information is given in the Registration Statement, the Incorporated Documents and any Prospectus
Supplement, there has not been: (a) any Material Adverse Change; (b) any transaction that is material to the Company and the Subsidiaries
taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent,
that is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations
incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from
the exercise of outstanding stock options or warrants) or outstanding indebtedness of the Company or any Subsidiary; (e) any dividend
or distribution of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or
not insured) to the property of the Company or any Subsidiary which has been sustained or will have been sustained which has a
Material Adverse Effect.


 






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(g)       Bring-down
Comfort Letter.  On each Closing Date, the Placement Agent shall have received from McGladrey LLP, a letter
dated as of such Closing Date, in form and substance satisfactory to the Placement Agent, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection (a) of this Section 5, except that the specified
date referred to therein for the carrying out of procedures shall be no more than three business days prior to such Closing
Date.


 


(h)       Stock
Exchange Listing. The Common Stock shall be registered under the Exchange Act and shall be listed on the Trading Market, and
the Company shall not have taken any action designed to terminate, or likely to have the effect of terminating, the registration
of the Common Stock under the Exchange Act or delisting or suspending from trading the Common Stock from the Trading Market, nor
shall the Company have received any information suggesting that the Commission or the Trading Market is contemplating terminating
such registration or listing.


 


(i)       Lock-Up
Agreements. The Placement Agent shall have received lockup agreements in customary form reasonably acceptable to the Placement
Agent from each executive officer, director and greater than 5% shareholder of the Company with the exception of one entity, the
identity of which has been agreed to by the Company and the Placement Agent, agreeing not to dispose of any of the Company’s
securities for a period of 75 days from the Closing Date.


 


(j)       Additional
Documents. On or before each Closing Date, the Placement Agent and counsel for the Placement Agent shall have received such
information and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale
of the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.


 


If
any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated
by the Placement Agent by notice to the Company at any time on or prior to a Closing Date, which termination shall be without
liability on the part of any party to any other party, except that Section 6 (Payment of Expenses), Section 7 (Indemnification
and Contribution) and Section 8 (Representations and Indemnities to Survive Delivery) shall at all times be effective and shall
survive such termination.


 






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Section
6.           Payment of Expenses. The Company agrees to pay all costs, fees and expenses incurred by the Company in connection with
the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation:
(i) all expenses incident to the issuance, delivery and qualification of the Securities (including all printing and engraving
costs); (ii) all fees and expenses of the registrar and transfer agent of the Common Stock; (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Securities; (iv) all fees and expenses of the Company’s
counsel, independent public or certified public accountants and other advisors; (v) all costs and expenses incurred in connection
with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Base Prospectus and each Prospectus Supplement, and all amendments
and supplements thereto, and this Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses incurred by the
Company or the Placement Agent in connection with qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Securities for offer and sale under the state securities or blue sky laws or the securities
laws of any other country, and, if requested by the Placement Agent, preparing and printing a “Blue Sky Survey,”
an “International Blue Sky Survey” or other memorandum, and any supplements thereto, advising the Placement
Agent of such qualifications, registrations and exemptions; (vii) if applicable, the filing fees incident to the review and approval
by the FINRA of the Placement Agent's participation in the offering and distribution of the Securities; (viii) the fees and expenses
associated with including the Securities on the Trading Market; (ix) all costs and expenses incident to the travel and accommodation
of the Company’s and the Placement Agent's employees on the “roadshow,” if any; and (x) all other fees,
costs and expenses referred to in Part II of the Registration Statement.


 


Section
7.            Indemnification and Contribution.


 


(a)
       The Company agrees to indemnify and hold harmless the Placement Agent, its affiliates and each person controlling the Placement
Agent (within the meaning of Section 15 of the Securities Act), and the directors, officers, agents and employees of the
Placement Agent, its affiliates and each such controlling person (the Placement Agent, and each such entity or person. an “Indemnified
Person”) from and against any losses, claims, damages, judgments, assessments, costs and other liabilities (collectively,
the “Liabilities”), and shall reimburse each Indemnified Person for all fees and expenses (including the reasonable
fees and expenses of one counsel for all Indemnified Persons, except as otherwise expressly provided herein) (collectively, the
“Expenses”) as they are incurred by an Indemnified Person in investigating, preparing, pursuing or defending
any Actions, whether or not any Indemnified Person is a party thereto, (i) caused by, or arising out of or in connection with,
any untrue statement or alleged untrue statement of a material fact contained in any Incorporated Document or by any omission
or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (other than untrue statements or alleged untrue statements in, or omissions or alleged omissions
from, information relating to an Indemnified Person furnished in writing by or on behalf of such Indemnified Person expressly
for use in the Incorporated Documents) or (ii) otherwise arising out of or in connection with advice or services rendered or to
be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or transactions; provided, however, that, in the case
of clause (ii) only, the Company shall not be responsible for any Liabilities or Expenses of any Indemnified Person that are finally
judicially determined to have resulted solely from such Indemnified Person's (x) gross negligence or willful misconduct in connection
with any of the advice, actions, inactions or services referred to above or (y) use of any offering materials or information concerning
the Company in connection with the offer or sale of the Securities in the Offering which were not authorized for such use by the
Company and which use constitutes gross negligence or willful misconduct. The Company also agrees to reimburse each Indemnified
Person for all Expenses as they are incurred in connection with enforcing such Indemnified Person's rights under this Agreement.


 






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 (b)       Upon
receipt by an Indemnified Person of actual notice of an Action against such Indemnified Person with respect to which indemnity
may be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure
by any Indemnified Person so to notify the Company shall not relieve the Company from any liability which the Company may have
on account of this indemnity or otherwise to such Indemnified Person, except to the extent the Company shall have been prejudiced
by such failure. The Company shall, if requested by the Placement Agent, assume the defense of any such Action including the employment
of counsel reasonably satisfactory to the Placement Agent, which counsel may also be counsel to the Company. Any Indemnified Person
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company has failed promptly to assume the defense
and employ counsel or (ii) the named parties to any such Action (including any impeded parties) include such Indemnified Person
and the Company, and such Indemnified Person shall have been advised in the reasonable opinion of counsel that there is an actual
conflict of interest that prevents the counsel selected by the Company from representing both the Company (or another client of
such counsel) and any Indemnified Person; provided that the Company shall not in such event be responsible hereunder for the fees
and expenses of more than one firm of separate counsel for all Indemnified Persons in connection with any Action or related Actions,
in addition to any local counsel. The Company shall not be liable for any settlement of any Action effected without its written
consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the
Placement Agent (which shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise
seek to terminate any pending or threatened Action in respect of which indemnification or contribution may be sought hereunder
(whether or not such Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination includes
an unconditional release of each Indemnified Person from all Liabilities arising out of such Action for which indemnification
or contribution may be sought hereunder. The indemnification required hereby shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and
payable.


  


(c)       In
the event that the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the
Company shall contribute to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is appropriate
to reflect (i) the relative benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified Person,
on the other hand, of the matters contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding
clause is not permitted by applicable law, not only such relative benefits but also the relative fault of the Company, on the
one hand, and the Placement Agent and any other Indemnified Person, on the other hand, in connection with the matters as to which
such Liabilities or Expenses relate, as well as any other relevant equitable considerations; provided that in no event shall the
Company contribute less than the amount necessary to ensure that all Indemnified Persons, in the aggregate, are not liable for
any Liabilities and Expenses in excess of the amount of fees actually received by the Placement Agent pursuant to this Agreement.
For purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the Placement Agent on the other
hand, of the matters contemplated by this Agreement shall be deemed to be in the same proportion as (a) the total value paid or
contemplated to be paid to or received or contemplated to be received by the Company in the transaction or transactions that are
within the scope of this Agreement, whether or not any such transaction is consummated, bears to (b) the fees paid to the Placement
Agent under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the Securities Act, as amended, shall be entitled to contribution from a party who was not guilty of fraudulent
misrepresentation.


 






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(d)       The
Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this
Agreement, the transactions contemplated thereby or any Indemnified Person's actions or inactions in connection with any such
advice, services or transactions except for Liabilities (and related Expenses) of the Company that are finally judicially determined
to have resulted solely from such Indemnified Person's gross negligence or willful misconduct in connection with any such advice,
actions, inactions or services.


 


(e)       The
reimbursement, indemnity and contribution obligations of the Company set forth herein shall apply to any modification of this
Agreement and shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person's
services under or in connection with, this Agreement.


 


Section
8.         Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company or any person controlling the Company, of its officers, and of the Placement Agent set forth
in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf
of the Placement Agent, the Company, or any of its or their partners, officers or directors or any controlling person, as the
case may be, and will survive delivery of and payment for the Securities sold hereunder and any termination of this Agreement.
A successor to a Placement Agent, or to the Company, its directors or officers or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Agreement.


 


Section
9.            Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed
to the parties hereto as follows:


 


If
to the Placement Agent to the address set forth above, attn: _______, Facsimile: ___________


  


With
a copy to: 


 


Ellenoff
Grossman & Schole LLP


1345
Avenue of the Americas, 11th Floor


New
York, New York 10105


Facsimile:
(201) 401-4741


Attention:
Robert Charron


 


If
to the Company:


 


eMagin
Corporation


2070
Route 52


Hopewell
Junction, NY 12533


Facsimile:
845-838-7901


Attention:
Jeffrey Lucas, CFO


 


With
a copy to: 


 


Sichenzia
Ross Friedman Ference LLP


61
Broadway, 32nd Floor


New
York, NY 10006


Facsimile:
(212) 930-9725


Attention:
Richard A. Friedman


 






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Any
party hereto may change the address for receipt of communications by giving written notice to the others.


 


Section
10.          Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit
of the employees, officers and directors and controlling persons referred to in Section 7 hereof, and to their respective successors,
and personal representative, and no other person will have any right or obligation hereunder.


 


Section
11.          Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other section, paragraph or provision hereof. If any Section, paragraph
or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid and enforceable.


 


Section
12.          Governing Law Provisions. This Agreement shall be governed as to validity, interpretation, construction, effect and
in all other respects by the internal laws of the State of New York, without regard to the conflict of laws principles thereof.
Notwithstanding any provision of this engagement letter to the contrary, the Company agrees that neither the Placement Agent nor
its affiliates, and the respective officers, directors, employees, agents and representatives of the Placement Agent, its affiliates
and each other person, if any, controlling the Placement Agent or any of its affiliates, shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described
herein except for any such liability for losses, claims, damages or liabilities incurred by us that are finally judicially determined
to have resulted from the bad faith or gross negligence of such individuals or entities. If either party shall commence an action
or proceeding to enforce any provision of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.


 


Section
13.          General Provisions.


 


(a)        This
Agreement, together with the engagement letter between us dated December 4, 2015, constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may
not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to benefit. Section headings herein are for the convenience
of the parties only and shall not affect the construction or interpretation of this Agreement.


 


(b)        The
Company acknowledges that in connection with the offering of the Securities: (i) the Placement Agent has acted at arms length,
are not agents of, and owe no fiduciary duties to the Company or any other person, (ii) the Placement Agent owes the Company only
those duties and obligations set forth in this Agreement and (iii) the Placement Agent may have interests that differ from those
of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against the Placement
Agent arising from an alleged breach of fiduciary duty in connection with the offering of the Securities


 






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If
the foregoing is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with
all counterparts hereof, shall become a binding agreement in accordance with its terms.


  


	 	Very
    truly yours,
	 	 
	 	eMAgin
    Corporation
	 	a
    Delaware corporation
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


  


The
foregoing Placement Agency Agreement is hereby confirmed and accepted as of the date first above written.


  


	CRAIG-HALLUM CAPITAL GROUP LLC	 
	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 


 


 


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